The retail distribution review’s (RDR) impact on the availability of workplace advice has heightened the need for a code on pension scheme charges, according to the Association of British Insurers (ABI).
Giving evidence to the Work and Pensions Select Committee ABI director general Otto Thoresen said employers would need the code more than ever to aid them selecting auto-enrolment schemes if the advice market contracted to the RDR.
‘In the past an IFA carried out that review [to ensure a scheme was suitable] but in the future world that may not be the case and it is something we have to engage with,’ he said.
'As a result of the RDR we will see how they [IFAs] continue. That’s an open question. Advisers have a role in which they are able to inform the employer. That’s why I'm keen to improve the way information is presented so employers can make the choice themselves. Providers will provide web tools tailored so that choice is easier.'
Thoresen’s comments come the same day as the ABI, alongside the National Association of Pension Funds (NAPF) and Investment Management Association (IMA) have published its long-awaited code of conduct on disclosing workplace scheme charges to apply across schemes, providers and advisers.
Jonathan Lipkin, IMA associate director of research and pensions, said employers needed to be able to compare providers’ charging structures before selecting a scheme.
'The challenge is to create a combined analysis and comparison tool. It is difficult to see how different providers will converge into a single charging model. So what we will hope to achieve is a tool that will allow an employer to plug in and see the effect of the impact of different charging structures.'
Joanne Segars, NAPF chief executive, said the code published today did not include rules on consultancy charging, but it would be included at a later date.
Consultancy charging takes money from employee contributions before they have been paid into a pension pot, directing them to the corporate adviser who helped to set up and administer a workplace pension scheme.
Yesterday the pensions minister Steve Webb to announce a review into whether consultancy charging should be banned.